• Lesaka delivers improved profitability as it exceeds FY24 Q2 guidance

    Source: Nasdaq GlobeNewswire / 06 Feb 2024 16:05:01   America/New_York

    JOHANNESBURG, South Africa, Feb. 06, 2024 (GLOBE NEWSWIRE) -- Lesaka Technologies, Inc. (Nasdaq: LSAK; JSE: LSK) today released results for the second quarter ended December 31, 2023 (“Q2 2024”).

    Performance Highlights for Q2 2024:

    • Revenue of $143.9 million (ZAR 2.7 billion)1 in Q2 2024, compared to $136.1 million (ZAR 2.4 billion)1 for the second quarter ended December 31, 2022 (“Q2 2023”). In South African Rand (“ZAR”), revenue grew 13%.
    • Operating income of $2.3 million (ZAR 42.5 million) for the quarter, compares to an operating loss of $2.2 million (ZAR 38.4 million) in Q2 2023, driven by successful execution against our strategy and growth in the Consumer and Merchant Divisions. Operating income for Q2 2024, includes a $1.0 million (ZAR 17.6 million) non-cash gain related to the release of a foreign currency translation reserve upon liquidation of a dormant subsidiary. 
    • Net loss continued to narrow, at $2.7 million (ZAR 50.8 million)1. This compares to a net loss of $6.6 million (ZAR 116.5 million)1 in Q2 2023 and represents a 56% improvement in ZAR.
    • Group Adjusted EBITDA, of $9.6 million (ZAR 180.5 million)1 exceeded the upper end of Q2 2024 guidance, representing an improvement of 38% in ZAR compared to the Q2 2023 Group Adjusted EBITDA of $7.4 million (ZAR 130.4 million)1. See Attachment B for a reconciliation of this non-GAAP measure.
    • The Merchant Division reported revenue $127.9 million (R2.4 billion), an increase of 13% in ZAR, compared to $120.6 million (ZAR 2.1 billion). Segment Adjusted EBITDA increased to $8.7 million (ZAR 162.9 million) for the quarter, a 2% increase in ZAR compared to Q2 2023. Year-on-year comparatives for revenue and Segment Adjusted EBITDA are impacted by a very strong comparative quarter in Q2 2023, primarily due to performance in our NUETS business, which is influenced by client capex cycles.
    • The Consumer Division reported Segment Adjusted EBITDA of $2.9 million (ZAR 55.2 million)1 in Q2 2024, a 445% increase in ZAR, compared to $0.6 million (ZAR 10.1 million) in Q2 2023. Strategic initiatives to grow the Consumer Division are yielding positive results with revenue increasing 16% year-on-year in ZAR to $16.7 million (ZAR 313 million), off a reduced cost base.
    • The Net debt to Group Adjusted EBITDA2 ratio improved to 2.7 times, compared to 3.6 times in Q2 2023, driven by debt reduction and growth in Group Adjusted EBITDA.
    • Guidance for fiscal 2024 re-affirmed.

    Outgoing Lesaka Group CEO Chris Meyer said, “I am pleased to announce that we have once again achieved excellent results this quarter. Our Consumer team's hard work over the past two years is paying off, resulting in substantial customer and profit growth. Our Merchant division has also performed well, and our anticipated acquisition of Touchsides has given us new technology and expertise in the tavern vertical, allowing us to continue innovating in this competitive market.

    The progress Lesaka has made in the last two years has been remarkable, and I am proud of our achievements. I am confident that the exceptional leadership team and motivated colleagues will continue Lesaka's journey towards becoming the leading fintech platform in Southern Africa. The appointment of Ali Mazanderani as Executive Chairman is very exciting for Lesaka. He is an exceptional fintech entrepreneur and leader, with deep experience and a proven track-record in the fintech sector and in emerging markets, including South Africa.”

    (1)     Average exchange rates applicable for the quarter: ZAR 18.71 to $1 for Q2 2024, ZAR 18.71 to $1 for Q1 2024, ZAR 17.52 to $1 for Q2 2023. The ZAR weakened 6.8% against the U.S. dollar during Q2 2024 when compared to Q2 2023 and 0.01% when compared to the prior sequential quarter (Q1 2024).
    (2)     Non-GAAP measure. Net Debt to EBITDA ratio is calculated as net debt at specific date divided by Annualized Group Adjusted EBITDA.

    Summary Financial Metrics

    Three months ended

      Three months ended        
      Dec 31,
    2023    		 Dec 31,
    2022    		 Sep 30,
    2023    		 Q2 ’24 vs
    Q2 ’23    		 Q2 ’24 vs
    Q1 ’24    		 Q2 ’24 vs
    Q2 ’23    		 Q2 ’24 vs
    Q1 ’24
    (All figures in USD ‘000s except per share data)USD ‘000’s
    (except per share data)    		 % change in USD % change in ZAR
    Revenue143,893  136,068  136,089  6%  6%  13%  6% 
                   
    GAAP operating income (loss)2,273  (2,192)  228  nm  897%  nm  897% 
                   
    Net loss attributable to Lesaka(2,707)  (6,649)  (5,651)  (59%)  (52%)  (57%)  (52%) 
                   
    GAAP loss per share ($)(0.04)  (0.11)  (0.09)  (60%)  (52%)  (57%)  (52%) 
                   
    Group Adjusted EBITDA(1)9,630  7,442  8,719  29%  10%  38%  10% 
                   
    Fundamental earnings (loss) per share ($)(1)0.01  (0.01)  -  nm  Nm  nm  nm 
                      
    Fully-diluted weighted average shares (‘000’s)63,805  62,763  63,805  2%  -  n/a  n/a 
                      
    Average period USD / ZAR exchange rate18.71  17.52  18.71  7%  0%  n/a  n/a 
                         

    Six months ended

      Six months ended F2024 vs
    F2023    		 F2024 vs
    F2023
      Dec 31,
    2023    		 Dec 31,
    2022    		  
    (All figures in USD ‘000s except per share data)USD ‘000’s
    (except per share data)    		% change
    in USD    		 % change
    in ZAR
    Revenue279,982  260,854  7%  16% 
             
    GAAP operating income (loss)2,501  (6,863)  nm  nm 
             
    Net loss attributable to Lesaka(8,358)  (17,345)  (52%)  (48%) 
             
    GAAP loss per share ($)(0.13)  (0.28)  (52%)  (48%) 
             
    Group Adjusted EBITDA(1)18,349  11,641  58%  71% 
             
    Fundamental earnings (loss) per share ($)(1)0.01  (0.09)  nm  nm 
             
    Fully-diluted weighted average shares (‘000’s)63,134  62,498  1%  n/a 
              
    Average period USD / ZAR exchange rate18.71  17.25  8%  n/a 
               

    (1) Group Adjusted EBITDA, fundamental earnings (loss) and fundamental earnings (loss) per share are non-GAAP measures and are described below under “Use of Non-GAAP Measures—Group Adjusted EBITDA, and —Fundamental net earnings (loss) and fundamental earnings (loss) per share.” See Attachment B for a reconciliation of GAAP net loss attributable to Lesaka to Group Adjusted EBITDA, and GAAP net loss to fundamental net earnings (loss) and earnings (loss) per share.

    Factors Impacting Comparability of Q2 2024 and Q2 2023 Results

    • Higher revenue: Our revenues increased 13% in ZAR, primarily due to an increase in low margin prepaid airtime sales and other value-added services, as well as higher transaction, insurance and lending revenues, which was partially offset by lower hardware sales revenue in our POS hardware distribution business given the lumpy nature of bulk sales;
    • Operating income generated: Operating profitability was achieved following years of operating losses as a result of the various cost reduction initiatives in Consumer implemented in prior periods as well as the contribution from Connect;
    • Higher net interest charge: The net interest charge increased to $4.4 million (ZAR 81.2 million) from $4.0 million (ZAR 70.0 million) primarily due to higher interest rates; and
    • Foreign exchange movements: The U.S. dollar was 7% stronger against the ZAR during Q2 2024 compared to the prior period, which adversely impacted our U.S. dollar reported results.

    Results of Operations by Segment and Liquidity

    Our chief operating decision maker is our Group Chief Executive Officer and he evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”). We do not allocate once-off items, stock-based compensation charges, certain lease charges, depreciation and amortization, impairment of goodwill or other intangible assets, other items (including gains or losses on disposal of investments, fair value adjustments to equity securities, fair value adjustments to currency options), interest income, interest expense, income tax expense or loss from equity-accounted investments to our reportable segments. See Attachment B for a reconciliation of GAAP net income before tax to Group Adjusted EBITDA.

    Merchant

    Merchant Division revenue was $127.9 million in Q2 2024, up 13% compared to Q2 2023 in ZAR. Segment revenue increased due to the increase in low margin prepaid airtime sales and other value-added services, which was partially offset by lower hardware sales revenue given the lumpy nature of bulk sales as well as lower revenue from certain valued-added services transactions (such as international money transfers). In ZAR, the increase in Segment Adjusted EBITDA is primarily due to the higher sales activity, which was partially offset by lower hardware sales. Connect records a significant proportion of its airtime sales in revenue and cost of sales, while only earning a relatively small margin. This significantly depresses the Segment Adjusted EBITDA margins shown by the business. Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for Q2 2024 and Q2 2023 was 6.8% and 7.6%, respectively.

    Consumer

    Consumer Division revenue was $16.7 million in Q2 2024, 16% higher in ZAR compared to Q2 2023. Segment revenue increased primarily due to more transaction fees generated from the higher EPE (“EasyPay Everywhere”) account holders base, higher insurance revenues, and an increase in lending revenue as a result of an increase in loan originations. This increase in revenue, together with the cost reduction initiatives initiated in fiscal 2022 and through fiscal 2023, have translated into a turnaround in the Consumer Division and the realization of sustained positive Segment Adjusted EBITDA. Our Segment Adjusted EBITDA margin for Q2 2024 and 2023 was 17.6% and 3.7%, respectively.

    Group costs

    Our group costs primarily include employee related costs in relation to employees specifically hired for group roles and costs related directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non-employee directors’ fees; legal fees; group and US-listed related audit fees; and directors’ and officers’ insurance premiums. Our group costs for fiscal 2024 decreased compared with the prior period due to lower external audit, legal and consulting fees and lower provision for executive bonuses, which was partially offset by higher employee costs.

    Cash flow and liquidity

    As of December 31, 2023, our cash and cash equivalents were $44.3 million and comprised of U.S. dollar-denominated balances of $4.5 million, ZAR-denominated balances of ZAR 688.5 million ($37.6 million), and other currency deposits, primarily Botswana pula, of $2.2 million, all amounts translated at exchange rates applicable as of December 31, 2023. The increase in our unrestricted cash balances from June 30, 2023, was primarily due to a positive contribution from our Merchant and Consumer operations and utilization of our borrowings facilities to fund certain components of our operations, which was partially offset by the utilization of cash reserves to fund certain scheduled and other repayments of our borrowings, purchase ATMs and vaults, and to make an investment in working capital.

    Outlook for the Third Quarter 2024 (“Q3 2024”) and Full Fiscal Year 2024 (“FY 2024”)

    While we report our financial results in USD, we measure our operating performance in ZAR, and as such we provide our guidance accordingly.

    For Q3 2024, the quarter ending March 31, 2024, we expect:

    • Revenue between ZAR 2.7 billion and ZAR 2.8 billion.
    • Group Adjusted EBITDA between ZAR 170 million and ZAR 190 million.

    We re-affirm our outlook for FY 2024, the year ending June 30, 2024. We expect:

    • Revenue between ZAR 10.7 billion and ZAR 11.7 billion.
    • Group Adjusted EBITDA between ZAR 680 million and ZAR 740 million.

    Our outlook provided does not include the impact of the acquisition of Touchsides or any mergers and acquisitions that we conclude.

    Management has provided its outlook regarding Group Adjusted EBITDA, which is a non-GAAP financial measure and excludes certain charges. Management has not reconciled this non-GAAP financial measure to the corresponding GAAP financial measure because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.

    Earnings Presentation for Q2 2024 Results

    Our earnings presentation for Q2 2024 will be posted to the Investor Relations page of our website prior to our earnings call.

    Webcast and Conference Call

    Lesaka will host a webcast and conference call to review results on February 7, 2024, at 8:00 a.m. Eastern Time which is 3:00 p.m. South Africa Standard Time (“SAST”). A replay of the results presentation webcast will be available on the Lesaka investor relations website following the conclusion of the live event.

    Webcast Details

    Participants using the webcast will be able to ask questions by raising their hand and then asking the question “live.”

    Conference Call Dial-in:

    • US Toll-Free: +1 346 248 7799
    • South Africa Toll-Free: + 27 21 426 8190

    Participants using the conference call dial-in will be unable to ask questions.

    Use of Non-GAAP Measures

    U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP measures and provide reconciliations to the most directly comparable GAAP measures. The presentation of Group Adjusted EBITDA, Group Adjusted EBITDA margin, fundamental net (loss) income, fundamental (loss) earnings per share, and headline (loss) earnings per share are non-GAAP measures.

    Non-GAAP Measures

    Group Adjusted EBITDA is net loss before interest, taxes, depreciation and amortization, adjusted for non-operational transactions (including loss on disposal of equity-accounted investments), loss from equity-accounted investments, stock-based compensation charges, lease adjustments and once-off items. Lease adjustments reflect lease charges and once-off items represents non-recurring expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued. Group Adjusted EBITDA margin is Group Adjusted EBITDA divided by revenue.

    Fundamental net earnings (loss) and fundamental earnings (loss) per share

    Fundamental net earnings (loss) and earnings (loss) per share is GAAP net loss and loss per share adjusted for the amortization of acquisition-related intangible assets (net of deferred taxes), stock-based compensation charges, and unusual non-recurring items, including costs related to acquisitions and transactions consummated or ultimately not pursued.

    Fundamental net earnings (loss) and earnings (loss) per share for fiscal 2024 also includes an impairment loss related to an equity-accounted investment, unrealized currency loss related to our non-core business which we are in the process of winding down and a reversal of allowance for doubtful loan receivable. Fundamental net loss and loss per share for fiscal 2023 also includes a net gain on disposal of equity-accounted investments, unrealized currency loss related to our non-core business which we are in the process of winding down and an impairment loss related to an equity-accounted investment.

    Management believes that the Group Adjusted EBITDA, fundamental net earnings (loss) and fundamental earnings (loss) per share metrics enhance its own evaluation, as well as an investor’s understanding, of our financial performance. Attachment B presents the reconciliation between GAAP net loss attributable to Lesaka and these non-GAAP measures.

    Headline (loss) earnings per share (“H(L)EPS”)

    The inclusion of H(L)EPS in this press release is a requirement of our listing on the JSE. H(L)EPS basic and diluted is calculated using net (loss) income which has been determined based on GAAP. Accordingly, this may differ to the headline (loss) earnings per share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial reporting framework, including but not limited to, International Financial Reporting Standards.

    H(L)EPS basic and diluted is calculated as GAAP net (loss) income adjusted for the impairment losses related to our equity-accounted investments and (profit) loss on sale of property, plant and equipment. Attachment C presents the reconciliation between our net (loss) income used to calculate (loss) earnings per share basic and diluted and H(L)EPS basic and diluted and the calculation of the denominator for headline diluted (loss) earnings per share.

    About Lesaka (www.lesakatech.com)

    Lesaka Technologies, (Lesaka™) is a South African Fintech company that utilizes its proprietary banking and payment technologies to deliver superior financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. Lesaka’s mission is to drive true financial inclusion for both merchant and consumer markets through offering affordable financial services to previously underserved sectors of the economy. Lesaka offers cash management solutions, growth capital, card acquiring, bill payment technologies and value-added services to formal and informal retail merchants as well as banking, lending, and insurance solutions to consumers across Southern Africa. The Lesaka journey originally began as “Net1” in 1997 and later rebranded to Lesaka (2022), with the acquisition of Connect. As Lesaka, the business continues to grow its systems and capabilities to deliver meaningful fintech-enabled, innovative solutions for South Africa’s merchant and consumer markets.

    Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE: LSK). Visit www.lesakatech.com for additional information about Lesaka Technologies (Lesaka ™).

    Forward-Looking Statements

    This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “plans,” “could,” “would,” “may,” “will,” “intends,” “outlook,” “focus,” “seek,” “potential,” “mission,” “continue,” “goal,” “target,” “objective,” derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In this press release, statements relating to future financial results and future financing and business opportunities are forward-looking statements. Additional information concerning factors that could cause actual events or results to differ materially from those in any forward-looking statement is contained in our Form 10-K for the fiscal year ended June 30, 2023, as filed with the SEC, as well as other documents we have filed or will file with the SEC. We assume no obligation to update the information in this press release, to revise any forward-looking statements or to update the reasons actual results could differ materially from those anticipated in forward-looking statements.

    Investor Relations Contact:
    Phillipe Welthagen
    Email: phillipe.welthagen@lesakatech.com
    Mobile: +27 84 512 5393

    FNK IR:
    Rob Fink / Matt Chesler, CFA
    Email: lsak@fnkir.com

    Media Relations Contact:
    Janine Bester Gertzen
    Email: janine@thenielsennetwork.com


    LESAKA TECHNOLOGIES, INC.
    Unaudited Condensed Consolidated Statements of Operations
            Unaudited Unaudited
            Three months ended Six months ended
            December 31, December 31,
             2023  2022  2023  2022 
            (In thousands) (In thousands)
                       
    REVENUE $143,893  $136,068  $279,982  $260,854 
                       
    EXPENSE            
                       
     Cost of goods sold, IT processing, servicing and support  114,266   108,824   221,756   209,352 
     Selling, general and administration  21,541   23,517   44,056   46,448 
     Depreciation and amortization  5,813   5,919   11,669   11,917 
                       
    OPERATING INCOME (LOSS)  2,273   (2,192)  2,501   (6,863)
                       
    REVERSAL OF ALLOWANCE FOR DOUBTFUL EMI LOAN RECEIVABLE  -   -   250   - 
                       
    (LOSS) GAIN ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT  -   (112)  -   136 
                       
    INTEREST INCOME  485   389   934   800 
                       
    INTEREST EXPENSE  4,822   4,388   9,731   8,424 
                       
    LOSS BEFORE INCOME TAX EXPENSE  (2,064)  (6,303)  (6,046)  (14,351)
                       
    INCOME TAX EXPENSE  686   364   950   395 
                       
    NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS  (2,750)  (6,667)  (6,996)  (14,746)
                       
    EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS  43   18   (1,362)  (2,599)
                       
    NET LOSS ATTRIBUTABLE TO LESAKA $(2,707) $(6,649) $(8,358) $(17,345)
                       
    Net loss per share, in United States dollars:            
    Basic loss attributable to Lesaka shareholders $(0.04) $(0.11) $(0.13) $(0.28)
    Diluted loss attributable to Lesaka shareholders $(0.04) $(0.11) $(0.13) $(0.28)
                     


    LESAKA TECHNOLOGIES, INC.
    Unaudited Condensed Consolidated Balance Sheets
          Unaudited (A)
          December 31, June 30,
          2023  2023 
          (In thousands, except share data)
         ASSETS     
    CURRENT ASSETS     
     Cash and cash equivalents$44,316  $35,499 
     Restricted cash 23,522   23,133 
     Accounts receivable, net of allowance of - December: $422; June: $509 and other receivables 41,114   25,665 
     Finance loans receivable, net of allowance of - December: $4,742; June: $3,582 39,056   36,744 
     Inventory 27,622   27,337 
      Total current assets before settlement assets 175,630   148,378 
       Settlement assets 26,974   15,258 
        Total current assets 202,604   163,636 
    PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $39,667; June: $36,563 28,340   27,447 
    OPERATING LEASE RIGHT-OF-USE 5,649   4,731 
    EQUITY-ACCOUNTED INVESTMENTS 161   3,171 
    GOODWILL 137,666   133,743 
    INTANGIBLE ASSETS, net of accumulated amortization of - December: $38,476; June: $30,173 117,953   121,597 
    DEFERRED INCOME TAXES 10,256   10,315 
    OTHER LONG-TERM ASSETS, including reinsurance assets 77,963   77,594 
    TOTAL ASSETS 580,592   542,234 
               
         LIABILITIES     
    CURRENT LIABILITIES     
     Short-term credit facilities for ATM funding 23,407   23,021 
     Short-term credit facilities 9,291   9,025 
     Accounts payable 18,884   12,380 
     Other payables 45,115   36,297 
     Operating lease liability - current 1,691   1,747 
     Current portion of long-term borrowings 3,429   3,663 
     Income taxes payable 670   1,005 
      Total current liabilities before settlement obligations 102,487   87,138 
       Settlement obligations 26,090   14,774 
        Total current liabilities 128,577   101,912 
    DEFERRED INCOME TAXES 45,929   46,840 
    OPERATING LEASE LIABILITY - LONG TERM 4,108   3,138 
    LONG-TERM BORROWINGS 139,337   129,455 
    OTHER LONG-TERM LIABILITIES, including insurance policy liabilities 2,489   1,982 
    TOTAL LIABILITIES 320,440   283,327 
    REDEEMABLE COMMON STOCK 79,429   79,429 
               
         EQUITY     
    LESAKA EQUITY:     
    COMMON STOCK     
     Authorized: 200,000,000 with $0.001 par value;     
     Issued and outstanding shares, net of treasury: December: 64,443,523; June: 63,640,246 83   83 
    PREFERRED STOCK     
     Authorized shares: 50,000,000 with $0.001 par value;     
     Issued and outstanding shares, net of treasury: December: -; June: - -   - 
    ADDITIONAL PAID-IN-CAPITAL 339,149   335,696 
    TREASURY SHARES, AT COST: December: 25,295,261; June: 25,244,286 (288,436)  (288,238)
    ACCUMULATED OTHER COMPREHENSIVE LOSS (189,378)  (195,726)
    RETAINED EARNINGS 319,305   327,663 
    TOTAL LESAKA EQUITY 180,723   179,478 
    NON-CONTROLLING INTEREST -   - 
    TOTAL EQUITY 180,723   179,478 
               
    TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY$580,592  $542,234 
            

    (A) Derived from audited consolidated financial statements.


    LESAKA TECHNOLOGIES, INC.
    Unaudited Condensed Consolidated Statements of Cash Flows
       Unaudited Unaudited
       Three months ended Six months ended
       December 31, December 31,
       2023  2022  2023  2022 
       (In thousands) (In thousands)
                  
    Cash flows from operating activities           
     Net loss$(2,707) $(6,649) $(8,358) $(17,345)
     Depreciation and amortization 5,813   5,919   11,669   11,917 
     Movement in allowance for doubtful accounts receivable and finance loans receivable 1,164   1,480   2,689   2,529 
     Movement in interest payable (1,573)  1,436   191   1,462 
     Fair value adjustment related to financial liabilities (836)  81   (870)  144 
     Gain on disposal of equity-accounted investments -   112   -   (136)
     (Gain) Loss from equity-accounted investments (43)  (18)  1,362   2,599 
     Reversal of allowance for doubtful loans receivable -   -   (250)  - 
     Profit on disposal of property, plant and equipment (163)  (113)  (199)  (321)
     Facility fee amortized 89   196   316   445 
     Stock-based compensation charge 1,804   2,849   3,563   4,311 
     Dividends received from equity accounted investments 54   -   54   21 
     Increase in accounts receivable and other receivables (13,157)  1,962   (15,502)  (981)
     Increase in finance loans receivable (2,889)  (5,230)  (3,377)  (8,811)
     Increase in inventory 985   (1,193)  506   (1,472)
     Increase (Decrease) in accounts payable and other payables 13,728   4,829   14,103   4,391 
     Increase in taxes payable (654)  (513)  (346)  129 
     Decrease in deferred taxes (1,032)  (1,728)  (1,594)  (3,122)
      Net cash provided by (used) in operating activities 583   3,420   3,957   (4,240)
                  
    Cash flows from investing activities           
     Capital expenditures (2,198)  (3,992)  (5,007)  (8,493)
     Proceeds from disposal of property, plant and equipment 436   345   720   762 
     Acquisition of intangible assets (47)  (120)  (182)  (120)
     Proceeds from disposal of equity-accounted investment 3,508   138   3,508   391 
     Repayment of loans by equity-accounted investments 250   -   250   112 
     Loan to equity-accounted investment -   -   -   (112)
     Net change in settlement assets (43)  (10,131)  (11,280)  (12,015)
      Net cash provided by (used in) investing activities 1,906   (13,760)  (11,991)  (19,475)
                  
    Cash flows from financing activities           
     Proceeds from bank overdraft 69,012   167,224   128,586   313,292 
     Repayment of bank overdraft (66,048)  (175,380)  (128,841)  (312,302)
     Long-term borrowings utilized 8,557   9,083   11,028   10,142 
     Repayment of long-term borrowings (3,184)  (1,688)  (5,813)  (3,268)
     Acquisition of treasury stock (198)  (108)  (198)  (293)
     Proceeds from issue of shares 2   327   23   333 
     Guarantee fee -   (100)  -   (100)
     Net change in settlement obligations 197   9,581   10,893   11,568 
      Net cash provided (used in) by financing activities 8,338   8,939   15,678   19,372 
                  
    Effect of exchange rate changes on cash 2,005   4,806   1,562   (3,681)
    Net increase (decrease) in cash, cash equivalents and restricted cash 12,832   3,405   9,206   (8,024)
    Cash, cash equivalents and restricted cash – beginning of period 55,006   93,371   58,632   104,800 
    Cash, cash equivalents and restricted cash – end of period$67,838  $96,776  $67,838  $96,776 
                    

    Lesaka Technologies, Inc.

    Attachment A

    Operating segment revenue, operating (loss) income and operating (loss) margin:

    Three months ended December 31, 2023, and 2022 and September 30, 2023

            Three months endedChange - actualChange – constant exchange rate(1)
            Dec 31, 2023 Dec 31, 2022 Sep 30, 2023Q2 ’24
    vs Q2
    ’23    		Q2 ’24
    vs Q1
    ’24    		Q2 ’24
    vs Q2
    ’23    		Q2 ’24
    vs Q1
    ’24
    Key segmental data, in ’000, except
    margins    		   
    Revenue:             
     Merchant $127,870  $120,634  $121,361 6% 5% 13% 5% 
     Consumer  16,707   15,434   15,580 8% 7% 16% 7% 
       Subtotal: Operating segments  144,577   136,068   136,941 6% 6% 14% 6% 
       Intersegment eliminations  (684)   -   (852) nm (20%) nm (20%) 
        Consolidated revenue $143,893  $136,068  $136,089 6% 6% 13% 6% 
                        
    Segment Adjusted EBITDA             
     Merchant $8,693  $9,120  $8,061 (5%) 8% 2% 8% 
     Consumer  2,948   578   2,480 410% 19% 445% 19% 
      Group costs  (2,011)   (2,256)   (1,822) (11%) 10% (5%) 10% 
       Group Adjusted EBITDA $9,630  $7,442  $8,719 29% 10% 38% 10% 
                        
    Segment Adjusted EBITDA margin (%)           
     Merchant  6.8%   7.6%   6.6%     
     Consumer  17.6%   3.7%   15.9%     
      Group Adjusted EBITDA margin  6.7%   5.5%   6.4%     

    (1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q2 2024 also prevailed during Q2 2023 and Q1 2024.

    Six months ended December 31, 2023 and 2022

                  Change -
    actual    		Change –
    constant
    exchange
    rate(1)
            Six months ended
    December 31,    		 F2023
     vs
    F2022    		F2023
     vs
    F2022
    Key segmental data, in ’000, except margins 2023  2022  
    Revenue:         
     Merchant $249,231  $230,416  8% 17% 
     Consumer  32,287   30,438  6% 15% 
       Subtotal: Operating segments  281,518   260,854  8% 17% 
       Intersegment eliminations  (1,536)   -  nm nm 
        Consolidated revenue $279,982  $260,854  7% 16% 
                    
    Segment Adjusted EBITDA         
     Merchant $16,754  $17,013  (2%) 7% 
     Consumer  5,428   (816)  nm nm 
      Group costs  (3,833)   (4,556)  (16%) (9%) 
       Group Adjusted EBITDA $18,349  $11,641  58% 71% 
                    
    Segment Adjusted EBITDA (loss) margin (%)         
     Merchant  6.7%   7.4%    
     Consumer  16.8%   (2.7%)    
      Group Adjusted EBITDA (loss) margin  6.6%   4.5%    
                  

    (1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the first half of fiscal 2024 also prevailed during the first half of fiscal 2023.

    Loss from equity-accounted investments:

    The table below presents the relative loss from our equity-accounted investments:

      Three months ended
    December 31,    		  Six months ended
    December 31,
       2023  2022 %
    change    		  2023   2022  %
    change
    Finbond$- $- nm  $(1,445)   (2,631)  (45%) 
     Share of net loss -  - nm   (278)   (1,521)  (82%) 
     Impairment -  - nm   (1,167)   (1,110)  5% 
    Other 43  18 139%   83   32  159% 
     Share of net income 43  18 139%   83   32  159% 
     Loss from equity-accounted investments $43 $18 139%  $(1,362)  $(2,599)  (48%) 


    Lesaka Technologies, Inc.

    Attachment B

    Reconciliation of GAAP loss attributable to Lesaka to Group Adjusted EBITDA loss:

    Three and six months ended December 31, 2023 and 2022

             Three months ended Six months ended
             December 31, Sept 30, Dec-31
             2023  2022  2023  2023  2022 
    Loss attributable to Lesaka - GAAP$(2,707) $(6,649) $(5,651) $(8,358) $(17,345)
    Loss from equity accounted investments (43)  (18)  1,405   1,362   2,599 
     Net loss before (earnings) loss from equity-accounted investments (2,750)  (6,667)  (4,246)  (6,996)  (14,746)
     Income tax (benefit) expense 686   364   264   950   395 
      Loss before income tax expense (2,064)  (6,303)  (3,982)  (6,046)  (14,351)
      Reversal of allowance for doubtful EMI loans receivable -   -   (250)  (250)  - 
      Net (gain) loss on disposal of equity-accounted investment -   112   -   -   (136)
      Unrealized (gain) loss FV for currency adjustments (122)  -   102   (20)  - 
      Operating income/(loss) after PPA amortization and net interest (non-GAAP) (2,186)  (6,191)  (4,130)  (6,316)  (14,487)
      PPA amortization (amortization of acquired intangible assets)  3,592   3,842   3,608   7,200   7,770 
       Operating income/(loss) before PPA amortization after net interest (non-GAAP) 1,406   (2,349)  (522)  884   (6,717)
       Interest expense 4,822   4,388   4,909   9,731   8,424 
       Interest income (485)  (389)  (449)  (934)  (800)
        Operating income/(loss) before PPA amortization and net interest (non-GAAP) 5,743   1,650   3,938   9,681   907 
        Depreciation (excluding amortization of intangibles) 2,221   2,077   2,248   4,469   4,147 
        Stock-based compensation charges 1,804   2,849   1,759   3,563   4,311 
        Lease adjustments 678   747   696   1,374   1,559 
        Once-off items (816)  119   78   (738)  717 
         Group Adjusted EBITDA - Non-GAAP$9,630  $7,442  $8,719  $18,349  $11,641 
                             


      Three months ended Six months ended
      December 31, Sep 30, Dec-31
      2023  2022 2023 2023  2022
    Once-off items comprises:              
     Transaction costs$136  $119 $78 $214  $322
     (Income recognized) Expenses incurred related to closure of legacy businesses (952)  -  -  (952)  395
      $(816) $119 $78 $(738) $717
                      

    Once-off items are non-recurring in nature, however, certain items may be reported in multiple quarters. For instance, transaction costs include costs incurred related to acquisitions and transactions consummated or ultimately not pursued. The transactions can span multiple quarters, for instance in fiscal 2022 we incurred significant transaction costs related to the acquisition of Connect over a number of quarters, and the transactions are generally non-recurring.

    (Income recognized) Expenses incurred related to closure of legacy businesses represents (i) gains recognized related to the release of the foreign currency translation reserve on deconsolidation of a subsidiaries and (ii) costs incurred related to subsidiaries which we are in the process of deregistering/ liquidation and therefore we consider these costs non-operational and ad hoc in nature.

    Reconciliation of GAAP net loss and loss per share, basic, to fundamental net earnings (loss) and earnings (loss) per share, basic:

    Three months ended December 31, 2023 and 2022

     Net (loss) income
    (USD '000)    		 (L)PS, basic
    (USD)    		 Net (loss) income
    (ZAR '000)    		 (L)PS, basic
    (ZAR)
     2023  2022  2023  2022  2023  2022  2023  2022 
    GAAP(2,707) (6,649) (0.04) (0.11) (50,819) (116,463) (0.79) (1.86)
                    
    Intangible asset amortization, net2,624  2,766      49,104  48,432     
    Stock-based compensation charge1,804  2,849      33,810  49,903     
    Non core international - unrealized currency loss(952) -      (17,648) -     
    Transaction costs136  119      2,556  2,084     
    Net loss on disposal of equity-accounted investments-  112      -  1,962     
    Fundamental905  (803) 0.01  (0.01) 17,003  (14,082) 0.26  (0.22)
                            


    Six months ended December 31, 2023 and 2022

     Net (loss) income
    (USD '000)    		 (L) EPS, basic
    (USD)    		 Net (loss) income
    (ZAR '000)    		 (L)EPS, basic
    (ZAR)
     2024  2023  2024  2023  2024  2023  2024  2023 
    GAAP(8,358) (17,345) (0.13) (0.28) (156,454) (299,169) (2.43) (4.69)
                    
    Stock-based compensation charge3,563  4,311      66,607  74,357     
    Intangible asset amortization, net5,249  5,605      98,208  96,679     
    Impairment of equity method investments1,167  1,110      22,084  19,145     
    Non core international - unrealized currency loss(952) 395      (17,648) 6,813     
    Allowance for doubtful EMI loans receivable(250) -      (4,741) -     
    Transaction costs214  322      4,021  5,554     
    Net loss on disposal of equity-accounted investments-  (136)     -  (2,346)    
    Fundamental633  (5,738) 0.01  (0.09) 12,077  (98,967) 0.19  (1.55)
                            

    Lesaka Technologies, Inc.

    Attachment C

    Reconciliation of net loss used to calculate loss per share basic and diluted and headline loss per share basic and diluted:

    Three months ended December 31, 2023 and 2022

      2023  2022  
          
    Net loss (USD’000)(5,651) (6,649) 
    Adjustments:    
     Net loss on sale of equity-accounted investments-  112  
     Profit on sale of property, plant and equipment(163) (113) 
     Tax effects on above44  32  
          
    Net loss used to calculate headline loss (USD’000)(5,770) (6,618) 
          
    Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000)63,805  62,763  
          
    Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000)63,805  62,763  
          
    Headline loss per share:    
     Basic, in USD(0.09) (0.11) 
     Diluted, in USD(0.09) (0.11) 


    Six months ended December 31, 2023 and 2022

      2023  2022  
          
    Net loss (USD’000)(8,358) (17,345) 
    Adjustments:    
     Impairment of equity method investments1,167  1,110  
     Net gain on sale of equity-accounted investment-  (136) 
     Profit on sale of property, plant and equipment(199) (321) 
     Tax effects on above54  90  
          
    Net loss used to calculate headline loss (USD’000)(7,336) (16,602) 
          
    Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000)63,134  62,498  
          
    Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000)63,134  62,498  
          
    Headline loss per share:    
     Basic, in USD(0.12) (0.27) 
     Diluted, in USD(0.12) (0.27) 


    Calculation of the denominator for headline diluted loss per share

       Three months ended
    December 31,    		 Six months ended
    December 31,
       2023 2022 2023 2022
              
    Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP63,805 62,763 63,134 62,498
      Denominator for headline diluted loss per share63,805 62,763 63,134 62,498
              

    Weighted average number of shares used to calculate headline diluted loss per share represents the denominator for basic weighted-average common shares outstanding and unvested restricted shares expected to vest plus the effect of dilutive securities under GAAP. We use this number of fully diluted shares outstanding to calculate headline diluted loss per share because we do not use the two-class method to calculate headline diluted loss per share.


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